The truth about bankruptcy
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More people apply to make themselves bankrupt after the application process moves online.
New figures from the Insolvency Service show there has been an increase in the number of people declaring themselves bankrupt. In the third quarter of 2016, there was a 7% increase in the number of bankruptcies when compared to the same time period the year before.
When you look at the figures for bankruptcies overall though, there’s actually been a decrease. This is because there are fewer people being forced into bankruptcy by their creditors.
Increase in the number of insolvencies overall
There’s also been an increase in the number of people starting a solution to deal with insolvency in general. If you are insolvent, it means that you can’t afford to pay your debts when they are due, or that your assets are worth less than your debts. When you compare the third quarter of 2016 to the third quarter of 2015, the number of insolvencies rose by a hefty 19.3%.
The increase in the overall number takes into account the number of bankruptcies, as well as the number of Individual Voluntary Arrangements (IVAs) and Debt Relief Order (DROs). These are the three formal solutions available in England, Wales and Northern Ireland to deal with insolvency.
Some experts in the field have said that this overall increase could be because the rising cost of living and the falling value of the pound pushing more people into financial difficulty.
Why the increase?
The rising number of people making themselves bankrupt could be linked to the fact that the application process for bankruptcy changed significantly in April 2016. Since then you’ve only been able to apply for bankruptcy online, and the cost went down slightly. Importantly, this means that people no longer have to go to court to have their application considered.
For some, there is still a stigma surrounding bankruptcy, and the idea of going to court may have put people off going down this route to solve their debt problems. Now that the application can be made in the privacy of their own home, without the need to attend court, bankruptcy may prove to be far less daunting than it was before for people who are insolvent.
How much does it cost to go bankrupt?
It now costs £680 in total to go bankrupt. This is split between the Official Receiver’s fee of £550, and the administration fee of £130. This can be paid in instalments of as little as £5, but your application won’t be considered until it has been paid in full.
What should I do if I think I need to go bankrupt?
If you think you need to go bankrupt, you really should seek professional debt advice first - before you go ahead with the application. You can do this by contacting a debt charity, or by speaking to one of our trained advisors here at Debt Advisory Centre. Just use one of the options at the bottom of the page and someone will be happy to help.
While bankruptcy can be an effective way to deal with unmanageable unsecured debts, it will have an effect on your life and you need to make sure that there isn’t another more suitable solution available to you before you go ahead.
An expert will be able to assess your finances and tell you whether bankruptcy is the way forward or not. If it is, they will be able to tell you how to go about making your application and answer any questions you have about the process.
by Christine WalshBack to blog home